Also known as: obligations of contract · contractual obligation · contractual obligations · contract obligation · obligations under contract
Written by attorneys · grounded in primary & secondary sources — see below
A duty implied in every contract that requires each party to perform its obligations honestly and fairly without undermining the other party's reasonable expectations. The duty supplies a standard for measuring performance when the agreement is silent or ambiguous on a point of conduct.
Odette Orozco granted a burden in gross over her land to allow Osprey Aviation access to a runway easement. When Odette later sold the land, the buyer argued that Odette's personal liability for maintaining the easement ended with the transfer. Because the duration of liability for a servitude burden in gross follows the rules that govern contractual obligations, Odette remained responsible for any breaches that occurred while she held the burdened parcel.
Omar Olson and Otis Olsen formed a general partnership to operate a delivery service. Their agreement attempted to replace the statutory good faith duty with a narrow honesty-only standard. The court held that the partners could prescribe reasonable measurement standards but could not eliminate the underlying obligation of good faith and fair dealing that the statute imposes on every partner.
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Orchard Farms formed a limited partnership with Otto Osman as a limited partner. The partnership agreement tried to remove the good faith obligation that limited partners owe under the statute. The court ruled that the agreement could set non-manifestly unreasonable standards for measuring performance but could not eliminate the contractual obligation of good faith and fair dealing that Section 305(a) imposes.
Onyx O'Reilly and Owen Ortega operated a general partnership that owned several retail stores. When Onyx withheld financial information from Owen to gain a personal advantage in a side deal, Owen sued. The court measured Onyx's conduct against the contractual obligation of good faith and fair dealing that every partner must observe when discharging duties under the partnership agreement and the act.
Optima Health formed a limited partnership in which Odette Orozco served as a limited partner. Odette used confidential partnership data to launch a competing clinic. The court held that Odette's conduct violated the contractual obligation of good faith and fair dealing that limited partners must observe when exercising rights under the partnership agreement and the act.
Osprey Aviation operated as a limited partnership with Omar Olson as the sole general partner. Omar diverted a lucrative route to his own separate company without disclosure. The court found that Omar breached the contractual obligation of good faith and fair dealing that general partners must observe when discharging duties under the partnership agreement and the act.
No. Partnership statutes permit the agreement to prescribe reasonable standards for measuring performance of the obligation but prohibit outright elimination of the duty itself.
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Yes. Both the Uniform Partnership Act and the Uniform Limited Partnership Act expressly require limited partners to discharge duties and exercise rights consistently with the contractual obligation of good faith and fair dealing.
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The duration of any person's liability to perform a servitude burden in gross is determined according to the rules that govern liability to perform contractual obligations.
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A partner violates the obligation when the partner fails to discharge duties or exercise rights honestly and fairly in a manner that undermines the reasonable expectations created by the partnership agreement and the governing act.
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…to continued possession was, of course, in dispute. If it were shown at a hearing that the appellants had defaulted on their contractual obligations, it might well be that the sellers of the goods would be entitled to repossession. But even assuming that the appellants had fallen behind in their installment payments, and that they had…